Some Tips on Buying an Old House

For some buyers, it’s hard not to fall in love with the special charm and character that old houses offer such as gabled roofs, hardwood floors, crown moldings, and more.  Old homes can also be attractive as affordable fixer-uppers and charming B&B establishments with their unique architecture and Old World craftsmanship rarely found in newer homes.  These homes often feature plastered walls, leaded glass windows, and original (antique) chandeliers and light fixtures.  As attractive as the property may be, it’s important to consult the experts and be aware of some common problems.  No buyer wants to discover that beneath the surface of their dream home lays a dilapidated wreck!

Foundation
One of the most important aspects of any home is the foundation.  This is even more important in older homes for two reasons.  First, a serious problem called “sulphate attack” can occur as a result of a chemical reaction between the soil and the concrete causing the foundation to crack and crumble.  Sulphates occur naturally in the soil and may also build up from lawn fertilizer over the years.  Modern foundation concrete is formulated to resist sulphate attack.  The second concern with older homes is that the centre beam of the home can begin to sink.  The result can be a sagging roof, bowed walls and sloping floors.  The remedy for both these problems is expensive and would require jacking up the house to replace the foundation and shore up the centre beam.  The cost of these renovations can range from several thousand dollars to $50,000 depending on the size of the home.

Electrical Wiring
Taking a tour of an older property after dark can be an illuminating experience!  It’s a great way to find out if there are obvious problems with the state of the electrical and lighting system of the home.  Do the lights flicker?  Is the current steady or do the lights fluctuate between bright and dull?  Is there adequate lighting in the home?  Any such problems could indicate faulty wiring or an overloaded circuit.  Even if you don’t find any problems, it’s important to have the wiring carefully inspected by a qualified home inspector or an electrician.

Many homes built or renovated from the late 1960s to the mid-1970s used aluminum wiring, which was less expensive than copper wire.  Unfortunately, many homeowners discovered over time that aluminum wiring posed a serious fire hazard.  Ask your inspector to check for aluminum wiring and, if necessary, factor the cost of rewiring into your offer price.

Also consider whether there are enough outlets in the home to suit the needs of a modern household.  Ask your home inspector or electrician if it is possible to safely install more outlets and to run a number of devices at once such as a television, computer, stove, etc.

Galvanized Pipe
Most insurance companies now refuse to cover water damage caused by leaks in a home with galvanized pipes.  These pipes rust out sooner or later.

Lead Paint
Lead paint is common in older homes.  Lead was used as a white pigment in paint until the mid-1950s.  Some paints contained as much as 50 percent lead by weight in the dried paint.  In 1976, the federal government passed regulations limiting the amount of lead in interior paint to 0.5 percent by weight (exterior paints may contain more lead).  Unfortunately, the affects of this toxic metal on adults and particularly children didn’t end in the 1970s; many old buildings still contain lead paint.

If you are planning to strip the paint in an old home, call in a professional renovation firm or use lead-safe dust masks and goggles.  Wear long pants and shirts when working and wash your face and hands thoroughly before eating.  Children and pregnant women should not be in the home during renovations.  In some cases, new paint has been applied over the old lead paint, in which case, you may not need to remove the old paint.

A home inspector and/or an environmental renovation company should be able to tell you if the paint in a prospective home will be a problem. You can also use home test kits available at many paint, hardware, and home centre stores.  To use these kits you would apply a chemical to the paint then look for a colour change, indicating the presence of lead.  According to the National Research Council Canada, the most dependable method of detecting lead-based paint is to have a sample analyzed by a commercial testing laboratory. Several samples will have to be taken from different parts of the house.  The most reliable laboratories are those certified by the Standards Council of Canada or the Canadian Association for Environmental Analytical Laboratories.

Asbestos
This naturally-occurring mineral makes a very effective fire- and heat-resistant material but unfortunately, in the mid-1970s doctors discovered that asbestos caused lung disease.  The tiny particles of this mineral are inhaled deep into the lungs and over a period of years begin to damage the tissues.  In old homes, asbestos was used in carpet underlay, textured paints, roofing felt, electrical wiring insulation, acoustic ceiling material, and insulation.  Your home inspector can let you know if you have asbestos or you may wish to consult an environmental assessment firm.

Finally, homes are a lot like people—the years eventually take a toll!  Things begin to sag and slope.  Rather than consulting a contractor, hire a structural engineer to examine your home.  They can give you an unbiased assessment of the home’s structure.  A structural engineering report is also more detailed than reports by home inspectors.  Both types of inspectors should be used when purchasing an old home.

For some buyers, renovations are not a deterrent but a challenge, particularly if they can purchase the property at a good price.  To determine the price you are willing to pay, add up the estimated costs to renovate the property based on a thorough assessment of the house.  Next, subtract that from the home’s anticipated market value after renovation, drawn from comparable real estate prices in the neighbourhood.  Your real estate professional can help you determine the market values.  Allow for an additional 5 percent for cost overruns and unforeseen problems plus inflation.  What’s left should be your offer.  If it’s in your price range, you may have the home of your dreams after all.

Tips To Buying on Leased Lands

A home is a substantial and important purchase. It is one of the few tax-free investments available to Canadians. There are no income taxes due on the capital gains, when selling a primary residence.* As well, retired homeowners often want to tap into the equity of a mortgage-free home with a reverse mortgage or sell the property to fund assisted living. Home is where the heart is and where people build wealth.

Although there are exceptions, the quality of that investment is very much affected by the land beneath the foundation. Structures deteriorate (and depreciate) while land appreciates. Land is finite, even more so in a world where the population is growing exponentially.

Buyers may fall in love with a spectacular kitchen, or vaulted ceilings, but they should also consider the land. There are three main types of ownership inCanada: strata, freehold and leasehold. Generally, a house on freehold land will appreciate the most because the land ownership is 100 percent. In a strata property, such as a condominium, each owner has ownership of a small percentage of the land, which helps to increase property value. Living on leased land offers no land title but occasionally offers some surprises!

In 1995, people living on leased lands titled to the Musqueam Indian Band suddenly faced rents of up to $36,000 a year. This was a huge increase from the $300 to $400 a year the leaseholders had been paying for 30 years. They spent five years and $1.5 million to fight the increases in court. The Supreme Court ruled that land rents could go as high as $10,000 per year.

In 2015, when the lease terms were up for renewal, the Musqueam Indian Band announced another increase, this time of eight times the previous rate. A resident would pay up to $80,000 per year instead of $10,000. Many of these homes are on relatively large lots, some with swimming pools, in a lovely neighbourhood. These people have invested in a structure, which cannot easily be relocated, plus the opportunity to live at a certain address.

Some of the people living on Musqueam Indian Band lands are fortunate to have prepaid leases. They were able to avoid the dramatic increases.

For buyers looking to purchase a home on leased land, lenders now typically require a prepaid lease. Banks also want the lease to exceed the length of the mortgage (amortization period) by several years. This is because landowners can evict tenants at the end of the lease period. Although it is unlikely that a landowner would do this, it is their right. They could decide to build a commercial complex, if they feel that is more profitable than residential housing.

A reverse mortgage is also less attainable for homeowners living on leased land. A reverse mortgage relies on land value for a stable price. Home shoppers should research whether a potential purchase would qualify for a reverse mortgage in the future. Being able to unlock the equity in a home can add to comfort in retirement.

What are the benefits of purchasing on leased land? Price is a key benefit. Typically it is less expensive than a home on freehold land. If a person wants to own a house, for example, but cannot afford one in an area with freehold title, a home on leased land could be an option.

Location is another benefit. Sometimes leased land is in a great location beside a lake or a ski hill.

InCanada, under the Indian Act and protected under the Constitution, title to certain reserve lands is held by the federal government ofCanadafor the use and benefit of a band. Some bands are self-governing and are granted full control over management of the lands and have a separate land registry system.

For those considering buying a home or condominium on leased land, research is essential. Consider these points:

  • What are the lease terms?
  • What are the fees, taxes and/or rents payable on the property?
  • Does the property qualify for a reverse mortgage, if desired?
  • What is the price history of the property?

Buying on leased land can be a good option for buyers who purchase with a full understanding of the costs and the lease structure weighed against the benefits.

* When you sell your home, you may realize a capital gain. If the property was your principal residence for every year you owned it, you do not have to report the sale on your income tax and benefit return. For more information, visit http://www.cra-arc.gc.ca.

Buying on Leased Lands

 

A home is a substantial and important purchase. It is one of the few tax-free investments available to Canadians. There are no income taxes due on the capital gains, when selling a primary residence.* As well, retired homeowners often want to tap into the equity of a mortgage-free home with a reverse mortgage or sell the property to fund assisted living. Home is where the heart is and where people build wealth.

 

Although there are exceptions, the quality of that investment is very much affected by the land beneath the foundation. Structures deteriorate (and depreciate) while land appreciates. Land is finite, even more so in a world where the population is growing exponentially.

 

Buyers may fall in love with a spectacular kitchen, or vaulted ceilings, but they should also consider the land. There are three main types of ownership inCanada: strata, freehold and leasehold. Generally, a house on freehold land will appreciate the most because the land ownership is 100 percent. In a strata property, such as a condominium, each owner has ownership of a small percentage of the land, which helps to increase property value. Living on leased land offers no land title but occasionally offers some surprises!

 

In 1995, people living on leased lands titled to the Musqueam Indian Band suddenly faced rents of up to $36,000 a year. This was a huge increase from the $300 to $400 a year the leaseholders had been paying for 30 years. They spent five years and $1.5 million to fight the increases in court. The Supreme Court ruled that land rents could go as high as $10,000 per year.

 

In 2015, when the lease terms were up for renewal, the Musqueam Indian Band announced another increase, this time of eight times the previous rate. A resident would pay up to $80,000 per year instead of $10,000. Many of these homes are on relatively large lots, some with swimming pools, in a lovely neighbourhood. These people have invested in a structure, which cannot easily be relocated, plus the opportunity to live at a certain address.

 

Some of the people living on Musqueam Indian Band lands are fortunate to have prepaid leases. They were able to avoid the dramatic increases.

 

For buyers looking to purchase a home on leased land, lenders now typically require a prepaid lease. Banks also want the lease to exceed the length of the mortgage (amortization period) by several years. This is because landowners can evict tenants at the end of the lease period. Although it is unlikely that a landowner would do this, it is their right. They could decide to build a commercial complex, if they feel that is more profitable than residential housing.

 

A reverse mortgage is also less attainable for homeowners living on leased land. A reverse mortgage relies on land value for a stable price. Home shoppers should research whether a potential purchase would qualify for a reverse mortgage in the future. Being able to unlock the equity in a home can add to comfort in retirement.

 

What are the benefits of purchasing on leased land? Price is a key benefit. Typically it is less expensive than a home on freehold land. If a person wants to own a house, for example, but cannot afford one in an area with freehold title, a home on leased land could be an option.

 

Location is another benefit. Sometimes leased land is in a great location beside a lake or a ski hill.

 

InCanada, under the Indian Act and protected under the Constitution, title to certain reserve lands is held by the federal government ofCanadafor the use and benefit of a band. Some bands are self-governing and are granted full control over management of the lands and have a separate land registry system.

 

For those considering buying a home or condominium on leased land, research is essential. Consider these points:

  • What are the lease terms?
  • What are the fees, taxes and/or rents payable on the property?
  • Does the property qualify for a reverse mortgage, if desired?
  • What is the price history of the property?

 

Buying on leased land can be a good option for buyers who purchase with a full understanding of the costs and the lease structure weighed against the benefits.

Learn More About Brick Maintenance

Brick is one of the world’s oldest building materials and one of the most enduring. It is fireproof as well as pest and weather resistant. Because brick does not require painting and never warps, rots or fades, brick homes built hundreds of years ago are still standing and with some maintenance they can look as attractive as the day they were built.

There are two components to brick structures: the brick itself, and the mortar. Brick is made mainly from clay with the addition of small stones, seashells, lime and other secondary ingredients such as colouring. The clay mixture is molded into shapes and fired at very high temperatures (1,000 degrees Celsius or more). Mortar is made from a mixture of sand, lime, pigment and cement. Although the composition of the mortar and the clay used to make the bricks will vary slightly depending on the region, the results are generally long lasting. The Great Wall of China demonstrates the durability and strength of mortar. In the 1300’s, during the Ming Dynasty, part of the wall was rebuilt using a special mortar made of clay, lime and rice flour. The wall is still sound to this day.

If you have a brick home or would like to own one, it is reassuring to know that compared to many other building materials such as wood and stucco, brick requires little maintenance. When maintenance is required, however, it can be costly and time-consuming. The bricks themselves can typically last for centuries if the hard fired exterior is not damaged. The main concern with brick construction tends to be the mortar, which usually only lasts between 50 and 100 years. Unfortunately, not all mortar is as durable as that used in the Great Wall!

Over time, mortar begins to deteriorate becoming cracked, eroded and in places separating from the brick. To test the strength of the mortar, gently scrape a knife across a seam. If mortar crumbles or flakes off, it is advisable to repair it promptly before further deterioration occurs. Once moisture is able to penetrate the wall through eroded or cracked mortar, it can do damage to the interior structure of the building. A common problem in older homes occurs when moisture reaches the interior walls, weakening the walls and creating an ideal habitat for unhealthy molds.

There are a number of important considerations when repairing mortar. If you plan to do the work yourself rather than hiring a professional company, be careful to use the proper mortar and to mix it with water in the correct proportions. If your proportions are wrong, the mortar may not expand and contract as it should with temperature fluctuations. As a result, the pressure of expansion may cause the old brick to crack. Also the mortar used a hundred years ago or more tended to have a higher lime content and did not expand to the same degree as modern products. If you have an old home, you may wish to consult a professional regarding the best type of mortar.

Another step that requires caution is the removal of the deteriorating mortar. You can use a chisel or old screwdriver to carefully scrape off the crumbling mortar. Only remove the top 12mm to 18mm of mortar. If you use a power grinder to remove mortar you may find it removes too much too quickly and can chip the bricks. In general, power grinders should be left to experienced professionals.

Painted brick poses other challenges. In order to create a firm seal, a new layer of mortar must be applied to the existing mortar. If the old mortar is covered by paint, the new layer will not bond properly. Most likely, the paint will have to be removed. Before removing the paint consider its age. According to Health Canada, exterior paint manufactured before 1980 most likely contains lead. During removal of the paint you may be exposed to dangerous levels of lead. It is highly recommended that you consult a professional paint-removal company. If you are sure that the only paint on the bricks was manufactured after 1992, there is no need for concern about lead. By that time, all consumer paints produced in Canada and the U.S. were virtually lead-free.

Taking all these factors into consideration you may be ready to repair your mortar. The first step is to remove the top 12mm to 18mm of deteriorating mortar. As mentioned above, hand tools are the best way to avoid damage to the bricks. After scraping, brush out the mortar dust. When you are ready to apply the new mortar, wet the seam and the bricks to prevent too much water being absorbed too quickly from the new mortar. Apply the mortar firmly to the seam with a pointed trowel. Trim off the excess. Use a damp cloth to remove excess from the brick faces; mortar can stain the brick. As it dries, use a small stone to shape the mortar to match the original. Mortar is often slightly recessed in a rounded hollow. It is best to work in small sections completing them as you go rather than scraping the entire building then applying new mortar.

Once you have repaired the mortar you may be planning to seal it will a water repellent as is done with wood. This is strongly inadvisable. Sealing the mortar and bricks would trap moisture inside and lead to decay. It is far better for the health of the building to allow the bricks to breathe.

Plan Ahead For A New House

There are many advantages to purchasing a new home: buyers are able to build equity, to enjoy the pride of ownership, and to obtain accommodation that is often larger and/or more luxurious than what is available to rent. Property has also proven to be a relatively safe and profitable investment in the wake of the technology stock plummet of 2000 and the Enron and Worldcom scandals.

If you are planning to buy a home within the next few weeks or months, preparing now can help you save time and money. When competing in a seller’s market, being prepared may also give you an advantage over other buyers. Consider the following tips prior to beginning your home search.

1. Know your bottom line before you begin looking at homes.

This means more than just knowing what price you are willing to pay. Consider the distance you are willing to commute to work, the number of bedrooms and bathrooms you require and what you need in terms of local community facilities. If you have children, the proximity to schools and parks will likely also be a consideration.
By knowing your bottom line, you can avoid making snap decisions guided by emotional responses to attractive home features or the pressures of competing buyers

2. Check your credit.

Bad credit can happen to good people. Sometimes it’s due to an unpaid or lost bill and other times it can be inaccuracies in the report itself. Who wants to discover that they have a bad credit rating after finding the home of their dreams? Rather than waiting for a lender to inform you of your credit rating, it is wise to obtain a copy prior to beginning your home search. This will give you an opportunity to address any inaccuracies and perhaps settle any outstanding debts. The more ‘blemishes’ you have on your credit report, the more likely it is that your lender will charge you a higher interest rate as a hedge against a bad loan. You can obtain a copy of your credit report from accredited organizations such as Equifax.

3. Avoid making any major purchases prior to buying home.

Lenders tend to become nervous when they see that a potential homeowner has stretched their disposable income to the breaking point by buying a car or a boat for example. Such purchases can make it more difficult to obtain a mortgage or may lower the mortgage amount.

4. Calculate the maximum monthly mortgage payment you can afford.

Generally, the banks will allow people to take out a mortgage that is approximately equal to 30 percent of their gross monthly income. Depending on your personal circumstances, it may not be wise to take the largest mortgage possible. Consider your other long and short-term expenses such as tuition for yourself or your children, a new car, or vacations. Also be sure to factor in monthly retirement savings.

5. Anticipate higher interest rates.

Recalculate the above maximum monthly mortgage payment based on interest rates that are two or three percent higher than current rates. Ask yourself if you could afford to pay a higher monthly payment without infringing on other commitments

6. Determine your cash flow at the time of purchase.

There are various fees involved in closing a deal including the down payment, closing costs (federal and property taxes, appraisal fees, title insurance, survey fees, etc.) and home insurance. If you are moving from a rental suite, you should also be prepared for expenses that may have been incorporated into your rent such as heat, hot water, electricity and cable service.

7. Budget for any repairs and maintenance that may be required in your new home.

Sometimes people purchase a ‘fixer-upper’ because the home has other redeeming features such as a large backyard or proximity to schools or parks. If your new home will require repairs or maintenance be sure to budget for these expenses. For example, a bedroom renovation can wait for a few months but most families cannot go a day without a functioning water heater!

8. Get your paperwork in order.

Lenders will often need to see bank statements, pay stubs, and tax documents for the past two years. If you are self-employed, tax documents, bank statements and collateral such as a vehicle or other property are important criteria to securing a mortgage

9. Get pre-approved for a loan.

Once you have calculated a budget you can live with, approach a lender to find out if you can get approved for a mortgage and how much you can spend on a home. Being pre-approved can put you in a stronger position when you make an offer and can save you valuable time in a seller’s market.

Buying a home is not only a lifestyle change; it is an important investment. Making the most of your investment means planning ahead to find the right home, the best rates and the ideal time for you to enter the market.

Tips To Building a New House

Finding the perfect combination of house and location can often be a challenge. Perhaps you have found a lot with a lovely view, privacy and mature vegetation. The only problem is the house. The World War II-era foundation is cracked, the kitchen is the size of a closet and none of the bedrooms will accommodate your furniture. Rather than passing up the purchase, consider whether it is feasible to renovate or rebuild. Once you have done a careful analysis of the renovation costs, it’s time to weight them against the costs and benefits of rebuilding from the ground up.

One of the greatest benefits of building a new home is freedom of choice. You can choose the size, layout, style and other features of your home. As you write your wish list, consider these factors:

Size: Will you be adding to your family with children or accommodating elderly parents? If so, anticipating future needs will ensure your home will be suitable for years to come. However, keep in mind that size directly affects the cost. Most builders provide a price based on square footage. As well, there are long-term expenses: a large home will cost more to heat, light, cool and furnish. If you choose a large square footage, consider building upwards rather than outwards to minimize the size and cost of the foundation.

Style: Although new home construction is an opportunity to express your individuality, be careful about venturing too far from the norm. A cutting-edge design may be difficult to sell in the future. Also, consider the styles in the neighbourhood. For example, you may not recoup the costs of building a high-end, 4,000-square foot home in a neighbourhood of moderately priced bungalows. Shape: Be aware that the shape of a home can affect the cost of construction. A rectangular or square home is the least expensive to build. The more angles and corners, the more labour and materials will be required.

Materials: Energy efficient materials and building techniques can substantially reduce heating, cooling and lighting costs over the long run. Technology is constantly improving and you may be pleasantly surprised at the current ‘pay back’ on some items. Solar water heaters pay for themselves in 8-10 years and, considering that they have a lifespan of approximately 25 years, you can enjoy 15 years or more of free water heating! Can you think of any building materials that are dropping in price? Solar panels are one of the very few. Increased consumer demand has resulted in a reduced cost-per-unit. This gives homeowners more incentive to use solar panels to supplement their energy needs and/or provide emergency power. There is also a wide range of energy-efficient options in flooring, insulation, roofing and windows.

Mobility: If you would like to spend your retirement years in the house, design with mobility in mind. This means creating the space to accommodate a wheelchair or walker. Traditional bathrooms and kitchens are too small to allow someone in a wheelchair to turn around. The Canadian Housing and Mortgage Corporation recommends allowing a manoeuvring space of 75 x 120 cm (30 x 47 in.) in front of or beside all fixtures including the bathtub, shower and storage spaces. Pocket doors save space within the bathroom. Countertops in the bathroom and kitchen should be lower than traditional at 86 cm (34 inches) to 91 cm (36 inches). Single lever taps are the easiest to use by someone in a wheelchair and anyone with arthritis.

Site Characteristics: Building on a flat lot usually costs less than building on a slope. Costs will increase if the builder needs to remove large trees or rocks before laying the foundation. Types of Plans Custom home plan This option typically requires the assistance of a licensed architect and an experienced contractor. However, your vision is essential to the process. Consider using design software to help you work out the details. It allows you to express your ideas in a format that is much clearer to the architect than handmade drawings! Ideally, purchase software that is compatible with your architect’s professional design programs.

Even with the assistance of technology, your design may require some adjustments by an architect particularly in terms of structural soundness. For example, the frame must be able to support the weight of the roof and an upper floor (if applicable) and withstand a certain level of vibration (such as in a minor earthquake). An architect may also be able to suggest cost-savings such as designing in two-foot increments to reduce lumber waste since lumber is usually sold in two-foot increments. Once the architect has completed the design, you will need to hire a building contractor who will coordinate the work of framers, electricians, plumbers and other tradespeople. Be sure to check references when selecting a contractor. Get the project scope, responsibilities, cost and timelines in writing.

Lastly, communicate with your contractor frequently and, ideally, at the worksite. Existing house plan Today, you can choose from thousands of home plans. Catalogues of plans are available for sale at most bookstores and on the internet. Once you find a home design you like, you can purchase the blueprints and other information that a contractor will require. Pre-fabricated homes This option promises to be faster and easier than starting ‘from scratch’. When you order one of the ‘pre-fab’ home plans, the manufacturer delivers the blueprints, pre-cut lumber, windows, doors needed to complete the home. Packages vary by manufacturer so carefully read the details and ask for a list of references.